Question

The Davis family purchased a house last year. They put $20,000 towards a down payment and took out a $265,000 mortgage. Because it was a new home, all the repairs and maintenance were covered under the builder’s warranty, but the Davises want to budget this coming year for unexpected expenses. When estimating costs for home repair and maintenance, a good estimate is to budget 1% of the purchase price of a house. What would be a good yearly estimate of repairs and maintenance for the Davis family’s home?

Answer 1

The purchase price = $20,000 + $265,000 = $285,000.
1% of $285,000 = 0.01 × $285,000 = $2,850.

So budget about $2,850 for yearly repairs and maintenance.